He explained that until government brings out policy direction to change the current trend in the industry, toward local businesses, unfair competition and predatory pricing will take indigenous businesses out.
ZEN Petroleum MD asserted in an interview with newsghana.com.gh that current trends in the industry seem to create the impression that indigenous businesses or companies are incapable of delivering quality services and products, hence much attention has been given to multinational companies who are frustrating local companies by reinforcing this perception.
It is established that after many years of domination by multinational companies, Ghana’s petroleum downstream industry is seeing increasing participation by indigenous and wholly-owned Ghanaian companies.
Currently, indigenous companies control about 70 per cent market share of the downstream sector but this is likely to slip to less than 40% in the next few years as new foreign controlled players are being allowed in and without any clear policies to control anti competitive practices such as predatory pricing.
The increased involvement of foreign companies in the downstream sector can be seen in terms of the number of existing licensed companies, as well as the volume of products marketed and distributed.
Local participation by indigenous companies in the petroleum downstream sector can be attributed to the local content initiatives that have been championed since the establishment of the National Petroleum Authority (NPA) by an Act of Parliament, Act 2005, (Act 691).
However, according to Mr. Tewiah what the country has now cannot be described as pro local empowerment since it fails to address the very pressing issues that still place multinationals above local companies.
He indicated that what prevails now is an over emphasis on local employment and not local ownership.
He explained that before the commencement of crude oil processing at Tema Oil Refinery (TOR), Ghana relied completely on imported refined petroleum products distributed by the local branches of multinational oil companies, such as Shell, British Petroleum, Mobil and Total.
These multinational petroleum companies, he said, controlled and dominated the importation and sale of petroleum products since they were virtually free to set their own products prices without any government’s interference until the establishment of TOR in 1961.
He also pointed out that with the emergence of locally owned and managed private Oil Marketing Companies such as ZEN Petroleum, Allied Oil, Petrosol, Modex and others, it is clear that the industry does not need to depend on foreign multinationals.
“We are ready to take our destiny into our own hands. We should provide an open, fair and level playing field for our own companies to work and be able to prove their worth. “What makes us think local companies cannot operate well and perform better in the downstream sector?”
He charged government to develop policy interventions to ensure implementation of local content regulations, backed by law, to help grow indigenous businesses to ensure profit retention and not capital flight by the multinational companies.
The downstream petroleum sector is worth $4 billion a year and contributes around 10% of GDP.
He expressed fears that the sector will go the way of the telecommunications and other sectors, with very little or no indigenous players.
“We need policy direction to change this trend.”
To this end, he noted the need for government to be consistent with the local content direction, give a clear and unambiguous definition of local content which takes into account equity participation or ownership and also management.
“Local content is notonly about how many Ghanaians they can employ or local employment. Local content is also about who owns the equity in the business, and who controls the business; so what we are trying to do is to create companies in Ghana which are predominantly Ghanaian owned and managed, providing goods and services for our long term benefit.” he said.
He also tasked local OMCs to ensure professionalism, quality of products and services so as to build confidence by setting high standards in the market.
By: PROSPER AGBENYEGA